JD.com's Moat Downgraded to Narrow; Shares Still Cheap as Concerns About Its Moat Are Overdone

JD.com offers authentic products from its online first-party (1P) business with speedy and high-quality delivery service. It adopts an asset-heavy 1P model with self-owned inventory and largely self-built logistics, complemented by an asset-light third-party (3P) model. By comparison, its competitor Alibaba relies mostly on a 3P model. Before the national subsidy program, JD’s e-commerce market share and revenue growth declined amid underperforming Pinduoduo and Douyin. To reinvigorate growth, JD wants to change customers' mindshare of JD as an everyday low-price platform and implement a CNY 10 billion subsidy program to attract price-sensitive customers. JD also streamlined its organization to improve its ability to respond to rapidly changing market dynamics. In 2025, JD launched its food delivery business to expand its user base, increase purchase frequency, diversify revenue streams, and enhance cross-selling opportunities. As the number of riders increased, the delivery speed of retail products locally available and even for some traditional e-commerce could also be improved. We expect JD to post weak sales growth in 2026, as the national trade subsidy program pulled forward demand into 2025.